TSMC bets big on 2nm by 2025 – but can it deliver?

Ambition meets reality as geopolitical, technical, and logistical challenges loom

analysis Over the last couple of weeks, TSMC's ambitious roadmap for its 2nm manufacturing process has sparked significant attention. The chipmaker is set to begin the mass production of its 2nm process node in 2025.

Amid the furor and speculation, it remains unclear when 2nm can realistically start rolling off production lines. With much talk of geopolitics, location, and timescales, just how grounded is TSMC's claim that it's going to turn on the assembly line of 2nm wafers next year?

According to the roadmap and on TSMC's 2nm logic section of its website, this next level and brand-new node plans to bring some key technologies to the fold. We're talking about the gate-all-around (GAA) transistor architecture and backside power delivery networks. The payoff of these? Well, they allegedly offer better performance and greater power efficiency than architecture on its N3 node.

The addition of the GAA transistor technology marks a departure from the FinFET designs that have dominated process nodes all the way back since 22nm. While GAA offers better electrostatic control and power efficiency, it's not without its challenges. Manufacturing nanosheet or nanowire structures at scale is like threading a needle blindfolded; it's a highly complex process and as an advanced node, it brings the added pressure of keeping defects to an absolute minimum.

That's not the end of it though, as TSMC plans to pair GAA with backside power delivery, which is a fancy way of saying the power lines will be routed below the transistor, not above. It's a clever and intricate design that frees up space for the signals on top, but implementing it is no small feat. So, what's the reality of it all? Well, combining these two innovations should make things more complex for TSMC's engineers and fabs. For reference, TSMC actually decided not to include BSPD in its N2P node on 2nm, but it is set to make an appearance through its A16 node, also referred to as 1.6nm.

Dodging high-NA headaches

So, let's talk about the lithography, because no conversation about 2nm is complete without mentioning the extreme ultraviolet (EUV) tools that are critical to manufacturing. TSMC has stated its initial 2nm runs won't rely on high-NA EUV (the next-gen version of EUV lithography), which is lucky really, because the expensive machines, which cost around $370 million each, actually don't exist yet in any meaningful quantity.

In fact, while ASML typically does not comment about its customers and the orders, the only High-NA EUV machines that seem to have been shipped and confirmed so far have both been received by Intel; TSMC is reportedly expecting delivery of one by the end of 2024. ASML, the Dutch firm and global leader in lithography tools, is responsible for these, and it is years away from ramping up production to meet demand. As it stands, it is estimated to be able to produce between five and six High-NA EUV units per year, so there could be a couple more machines out there.

By skipping high-NA EUV for the initial production run, TSMC avoids one immediate headache, but this also means the early 2nm process could lack the full performance and efficiency improvements as touted in its roadmap. If indeed TSMC does as it says and gets 2nm in full production in 2025, it might keep the headline intact, but the underlying story does look a little shakier.

Taiwan digs in: Core tech stays home

So aside from the above, there's also the political side and the obstacles that government regulation typically brings. Taiwan via their Minister of Economic Affairs, JW Kuo, made it abundantly clear that TSMC's most advanced nodes will stay on home soil for the foreseeable future. This is where things get a little cloudy from the "you can't have it because it belongs to us" prattle. As part of TSMC's Fab 21, which is currently being built in Arizona, US, two of the three fabs that are to be built according to TSMC will manufacture using the 2nm node.

The Taiwanese government might stamp its feet and state that it has no intention of letting its chipmaking crown jewels leave the island, at least until a newer process supersedes it. If taken literally, it may stall TSMC's Arizona fabs from rolling out 2nm until 2027 or around then.

However, TSMC's second fab at Fab 21 in Arizona, planned to bring 2nm production to US soil, isn't expected to be completed until 2028. Furthermore, the third fab of the trio, also slated for advanced 2nm chip production, isn't projected to be finished until the end of the decade. This makes JW Kuo's bold statement to the Taipei Times literally pointless to affirm.

In fact, when giving comments to the local paper, Kuo also said, "Although TSMC plans to make 2-nanometer chips [abroad] in the future, its core technology will stay in Taiwan." While neither Kuo nor TSMC has defined what the "core" technologies of 2nm are, if reading between the lines, it likely means that all the research and development, the GAA transistors, backside power delivery, even down to things like the mask making techniques, and the proprietary equipment configurations for 2nm, will remain in Taiwan.

Such a pronouncement is undoubtedly a strategic move for Taiwan, but it poses significant logistical challenges for TSMC. Concentrating production at "home" poses challenges in scaling Taiwan's finite engineering talent and managing significant construction expenses. For a company already facing rising costs and an ever-increasing demand for manufacturing capacity, the current political situation doesn't look to give TSMC the flexibility they might have hoped for.

While 2nm isn't explicitly part of the deal with the US government and its CHIPS Act, the $6.6 billion investment in TSMC's three fabs at the Arizona Fab 21 complex feels like a geopolitical flex. Sure, it might help shore up the supply chain for the US semiconductor industry in the long run. It's a little reminder that even when throwing billions of dollars at something to get things done, manufacturing chips, especially advanced manufacturing, is just as much about the timing as it is about the location.

Will TSMC's 2nm roadmap hold steady?

TSMC's 2025 target for 2nm mass production sounds bold, because it is. Even without taking any of the above into consideration, this is the same company that repeatedly pushed back the launch of its 3nm process before finally entering high-volume production last year. And 3nm wasn't even as big of a leap as 2nm with all of its added complexities of GAA and backside power delivery promises to be.

Intel and Samsung are hardly setting better examples, as Intel's 18A process (equivalent to 2nm) has hit delay after delay, and Samsung is still ironing out issues with its own GAA-based nodes. It's worth noting that it seems that none of the big players in the semiconductor industry are coasting to the finish line regarding 2nm.

TSMC's claims about 2nm are what we typically put down as some classic industry chest-thumping. The chipmaker will eventually deliver on its roadmap, but whether it can do so by 2025 is another matter entirely. Hitting that timeline would mean overcoming some challenges in design, manufacturing, and supply chain management. Hey, it's possible that TSMC might pull it off. After all, it often does, which is one reason they remain the leader in processor manufacturing.

In a sector where we see ambition frequently outpacing reality, this feels like another case where we'll believe it when we see it. TSMC, 2nm, mass production by 2025 - it's worth watching, but let's hold off popping the cork until the wafers are actually rolling off the line.  ®